Where Do We Go From Here?

August 6, 2009

It seems like this is always the question on everyone’s lips, but, of course, no one knows what the market will do. It might be a wise idea to maintain some flexibility. A recent article in Fortune makes the case for global allocation funds during uncertain times. Mina Kimes writes, “Under conditions like these, world allocation funds may have a distinct advantage. Rather than focusing on one type of investment, they are free to search the globe for opportunities and move nimbly in and out of different types of assets.”

The Systematic RS Global Macro portfolio, the Arrow DWA Balanced Fund, and the Arrow DWA Tactical Fund all use slightly different relative strength mechanisms, but all of them are global allocation funds. Right now, global allocation is a relatively fresh concept with U.S. investors, but I suspect the trend of globalisation may bring it more to the forefront in future years.

Click here to visit ArrowFunds.com for a prospectus & disclosures. Click here for disclosures from Dorsey Wright Money Management.

Leave a Comment » | Tactical Asset Alloc, Thought Process | Permalink

Posted by:

Trend Following for Economists

August 6, 2009

In this article, British economist Samuel Brittan steps out of line to tell the truth about economic forecasting. He says, “The popular view of economists is that they exist to make forecasts and do so badly. One of the more basic rules of the subject is that where a demand exists some people will come forward to supply it. The economists who have done so for forecasts have accordingly fallen flat on their faces. Their usual response is that most of the time they get it reasonably right. But what matters is whether they can identify significant turning points and systemic failures in good time. They cannot.” (my emphasis)

Forecasters in financial markets all face the same problem. No one can identify significant turning points in advance, yet plenty of people still seeming willing to fall flat on their faces trying. Financial media is populated with gurus with answers, although it takes only about 20 minutes of watching CNBC to find commentators on opposite sides of the same issue.

Instead of making a forecast and then feeling beholden to it, we think it is more sensible to keep a flexible, trend-following perspective. As trends change, move along with them rather than trying to guess when the turns will occur.

Leave a Comment » | Thought Process | Permalink

Posted by: